O2 UK Reportedly Mulling Return to the Fixed Broadband Market

Mobile operator O2 UK is reportedly reviewing the possibility of a return to the fixed line broadband ISP market, which it originally exited in 2013 as part of the £180m+ acquisition by Sky (Sky Broadband) of their BE Broadband based fixed line internet and phone network. We see an uphill struggle.

The story of O2’s original foray into the United Kingdom’s fixed line broadband market is easily one of the more interesting examples of how not to run an ISP. Prior to O2’s acquisition, BE Unlimited (aka – BE Broadband) had become one of the country’s first ISPs to offer an unbundled (LLU) and ADSL2+ based broadband network, which at the time made them both faster, cheaper and more flexible than other BT (Openreach) based ISPs.

As time went on BE’s edge was slowly eroded as rival LLU providers, such as TalkTalk and Sky Broadband, sprang up to challenge but the ISP continued to grow and they were eventually gobbled up by O2. Funnily enough BE’s original founders went on to create one of the country’s first true “full fibre” (FTTP/B) providers, Hyperoptic, but that’s another story.

Under O2 the network initially retained its reputation and for awhile continued to grow. Unfortunately this began to go into reverse as the new owner appeared to lose touch with changes in the wider market. Customers complained of price hikes, routing problems, network congestion, an inability to offer FTTC based “superfast broadband” packages (huge mistake at the time) and efforts to disconnect heavy users (here).

Suffice to say that few were surprised when, in 2013, O2 finally took the decision to re-focus upon the roll-out of their 4G mobile network and thus sold their fixed line base on to Sky (here).

O2’s Return to Fixed Line?

According to Bloomberg, O2’s Spanish parent (Telefonica) is said by industry sources to be reviewing a possible return to the UK’s fixed line broadband market, although at this stage the talk in that article of mounting a serious challenge to BT seems rather fanciful and may be more down to creative journalism than accurate reporting.

Telefonica has spent the past few years trying to either sell off or merge away O2 UK in order to tackle their underlying debts, although so far they’ve had precious little success with either approach (example). Since then the operator’s debts are understood to have become more “manageable” and as such Telefonica appears to have growing confidence in O2’s future position within the UK market, which they seem willing to back.

The report suggests that Telefonica / O2 may be considering several options, such as leasing bandwidth wholesale from BT / Openreach or Virgin Media (Virgin doesn’t do this yet but their parent is reported to be reviewing the idea of going open access), building its own network (this would have to be full fibre if they started from scratch) or acquiring an established player.

The latter two of the aforementioned options would be the most expensive approaches to take and it’s worth considering that O2 are mulling this over at the same time as having to consider the huge cost of deploying 5G technology. In that sense we think they’d be better off following by Three UK’s example and developing a 5G based home broadband product, but that’s just our view.

Building a new fixed line network from scratch, in a market where a lot of alternative network (AltNet) providers are already doing the same, seems likely to be too great of a risk for a company with O2’s flaky experience in the fixed line field. Similarly starting from scratch via a wholesale arrangement would be an uphill struggle. As such a greater possibility may come from the acquisition approach, much like they did before with BE.

Of course the review may equally amount to no change at all. Meanwhile BT and EE have been slowly working towards much closer convergence via a new all-IP network, although it’s worth noting that many consumers still prefer to keep their mobile and fixed line connectivity services separate and so the longer term appeal of this effort remains unclear.

By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, Google+, Facebook and Linkedin.

I could be wrong also, UKOnline were definitely the first nationally. BE may have beat them by a month or a few if you include a very limited (almost trial like at the time) rollout to what i think was a single London exchange.

Either way i personally think its too little too late for 02 to get back in the game, too many mobile providers in the fixed line broadband business now. Especially since Voda (no matter how good/bad they may be) have made a pretty considerable impact by being so cheap and even EE also having a product (not one i would recommend either but they are also established now).

O2 coming back and perhaps having spin offs for home fixed line broadband i certainly would never touch even at gun point. I spent about a year with both O2 and BE for home broadband.

The support and service side of things when O2 and BE were doing broadband was hideous. O2 were kind of known for being lousy when it came to support (regular confusion about download limits and other stupid issues) while BE tried to pretend they were a friendlier ISP, but ultimately were rotten at the core once O2 got their hands fully on them.

In the very early days (before they went national) BE were apparently ok, but nothing special despite the agenda they and some of its users tried to push. With regards to BE I joined them for only about a year much later in their life span (more towards the end) and saw numerous issues.

As time went on their network became a mess suffering congestion, routing issues and worse many users would have regular disconnections. Anyone that mentioned their issues too many times on their user forums out of sheer frustration ended up banned (ironic as it was a BE user only forum so you could argue those users were paying for a er ‘feature’ from the service which was taken away).

Worse the hardcore element (users and staff) when someone they disliked was banned would gloat once they had been which i thought was a disgusting, unprofessional thing. I actually remember being as good as verbally abused and threatened to be banned on their forums via email from a staff member for saying on their forums that they perhaps should not be attacking someone when they have taken their rights to defend thereself away.

Towards the end it became a complete and utter cluster cuck with promises of FTTC or better broadband which it was clear to anyone with any sense was never going to happen.

It got to the stage where their claims of being unlimited turned out to be untrue and they were kicking users of the service. Anyone that dared mention they were given a 30 day notice in their forums was similarly banned from those.

Trouble is BE and O2 went too far with their we are the all mighty and can do as we please approach and the complaints to the ASA, Ofcom and their alternate dispute provider finally killed BE and O2 and their clicky little club of hardcore preachers off.

They were probably the least reliable ISPs i ever had in my short year with them, higher up staff had a disgusting attitude and so did its long term users. (i would guess many of them have ended up at Plusnet, TT or Sky now, ironic as they are ISPs the clicky club used to bash).

It was a shame as a couple of the bottom run Bulgarian support at BE that would answer phones tried to do a good job and were probably the only thing that kept them going as long as they did. Likewise for O2 at the time if you got lucky you got a phone support member that would truly try to do anything to help you. Unfortunately they were outnumbered by a much more venomous attitude in both companies.

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